A**hole Specialists
- Thread starter rtharp
- Start date
Chas, So. Fla.
As far as specialists, I have recently started to trade QQQ, using it as a core and then nibbling at some of my basket stocks (NAS) along the way. The QQQ's move kind of slow, but seem to be more orderly. A couple of examples of situations I have faced with the specialist are the following.
Yesterday while covering a long position, the NYSE specialist filled me 3 cents BETTER than my target. A great surprise to me
.
However, this morning BOS was at the best bid at 27.81 while trades were going off on ISLD at 27.78 and moving lower. Being totally ignorant, I am sitting there wondering what is going on. AH HA, I said, it must be a stuck quote, so I hit my clear stuck hotkey, BOS, PHI disappear, ISLD now comes up best bid and it matches T&S. Okay lets get ready to short this puppy, by now it is at 27.65 not ideal, but it still has legs in my opinion. Suddenly BOS and PHI reappear on Best Bid at, from what I recall, 27.74. And the ISLD trades are still running lower. And yes I tried short at .81 and it did not fill.
So at this point I am not a happy camper. I call my level 2 and execution provider, PointDirex and say, whats up. Basically I found out that ISLD was undercutting the specialists and it may be better to execute on ISLD under certain circumstances. Sometimes the specialist is not too dependable and may be way slow in adjusting to rapidly changing conditions, or they may not be able to keep up, they are only human, after all.
Now I think that the specialists are probably the ones who keep the QQQs as orderly as they are, and I wish that we had a completely dependable system, full of persons that have integrity and honor but "men will be lovers of themselves, lovers of money", so we just have to deal with it. From now on I will execute on ISLD in A.M. and maybe with NYSE if the price is right.
Also remember that I am new to this specialist game so my experience is very limited and I just may not know what I am
doing. :eek: Just an observation
xstek
As far as specialists, I have recently started to trade QQQ, using it as a core and then nibbling at some of my basket stocks (NAS) along the way. The QQQ's move kind of slow, but seem to be more orderly. A couple of examples of situations I have faced with the specialist are the following.
Yesterday while covering a long position, the NYSE specialist filled me 3 cents BETTER than my target. A great surprise to me
. However, this morning BOS was at the best bid at 27.81 while trades were going off on ISLD at 27.78 and moving lower. Being totally ignorant, I am sitting there wondering what is going on. AH HA, I said, it must be a stuck quote, so I hit my clear stuck hotkey, BOS, PHI disappear, ISLD now comes up best bid and it matches T&S. Okay lets get ready to short this puppy, by now it is at 27.65 not ideal, but it still has legs in my opinion. Suddenly BOS and PHI reappear on Best Bid at, from what I recall, 27.74. And the ISLD trades are still running lower. And yes I tried short at .81 and it did not fill.
So at this point I am not a happy camper. I call my level 2 and execution provider, PointDirex and say, whats up. Basically I found out that ISLD was undercutting the specialists and it may be better to execute on ISLD under certain circumstances. Sometimes the specialist is not too dependable and may be way slow in adjusting to rapidly changing conditions, or they may not be able to keep up, they are only human, after all.
Now I think that the specialists are probably the ones who keep the QQQs as orderly as they are, and I wish that we had a completely dependable system, full of persons that have integrity and honor but "men will be lovers of themselves, lovers of money", so we just have to deal with it. From now on I will execute on ISLD in A.M. and maybe with NYSE if the price is right.
Also remember that I am new to this specialist game so my experience is very limited and I just may not know what I am
doing. :eek: Just an observation
xstek
"xstek I would love to have the option of executing more listed stocks on ISLD. That's all I really want...competition. A little competition goes a long long way for the customer"
it costs you money to trade most listed on isld.the spreads are wider sometimes much wider.
it costs you money to trade most listed on isld.the spreads are wider sometimes much wider.
I wouldn't spend too much time worrying about the Specialist. The last thing they want to do is risk their "cushy, well paid" job, just to screw you out of a few hundred or a couple of thousand shares.
Since we trade hundreds of times a week, there will always be an instance where we think we should have gotten treated differently, but 99% of the time, we are being treated fairly. By the time our traders learn all the rules, they stop complaining about the Specialists, and are happy with the "price improvements' and other benefits!!
Don
Since we trade hundreds of times a week, there will always be an instance where we think we should have gotten treated differently, but 99% of the time, we are being treated fairly. By the time our traders learn all the rules, they stop complaining about the Specialists, and are happy with the "price improvements' and other benefits!!
Don
When the spread is wider on an ECN than on the exchange (say in the qqq's), it isn't anything to complain about. It is simply that there are no either no sellers at the offer, or buyers at the bid. Remember, you may complain about specialists on the floor, but on the ECNs, we make the market. If we are not there, there is no market. The enemy is us
A safeguard does exist however. If you put in a market order on an ECN, and there is no price equal to or better than the exchange price, you just don't get a fill...not until the prices move to the market, or new bids/offers come in. But you will never be filled at a worse price.
I have often watched the prices of the qqq's on my level 2 instinet terminal while watching the prices on the amex. Occasionally you can arb the difference if you are fast enough. I have to believe however (though I don't know for certain), that the specialist has to be looking at the same thing, so it is a rare occurance to catch them flatfooted. Personally, I can't type or click fast enough to route my orders to take advantage of these situations. But I do work alongside some guys that do it. In better markets, I would say it isn't worth the effort to scalp a penny or two (or three or whatever....). But these days, every little bit helps. Too bad I am a bit older than the Nintendo generation. I think that quick fingered video game talent comes into play on this kind of thing.
When the specialist's spread does widen, making it easier to "middle" on an ECN, it is most likely due to a faster market. So even if you see an opportunity, while it exists for someone, it is unlikely to be you. Remember that the ECN's (the one I get to see stand alone is INCA) really are limited in size. You may see a bid or offer you want inside the specialist's spread, but what good is it if you go market on say 1000 shares and the price you want is only good for 100? Or worse, an odd lot (not on INCA, but certainly possible on say ISLD) You then get filled on the other 900 at the specialist's price anyway (in most cases). By the time that happens, you may not want the trade. And even the fastest can't type in a limit order price fast enough to avoid that. And if they do, again, the trade is probably going the wrong way by that time.
My thought is basically if you have conviction about the trade, don't sweat the penny (pennies). Why miss a trade with an unfilled limit order when a market order would have given you the certain fill?
Bear in mind, this is coming from a guy who trains traders to use limit orders virtually always to open positions. But the reason for that is I don't want the new traders to chase, so I have them ALWAYS open long trades by entering "bid" in the price box, eliminating them from buying into up movement, and "offer" when opening shorts. But that is just to establish good habits for trainees (which we all are for years really). Having said that, after you have disciplined yourself, sometimes you just want the trade beause you really believe in it. Timing then doesn't need to be perfect. That is when you should use market orders anyway (to open....closing trades, well sometimes you just NEED to get out).
And I agree with Don....the specialists don't want to ruin the good thing they have going. Hopefully the day will come (sooner the better) when they make themselves obsolete. Until then, they are just a part of our cost of doing business.
A safeguard does exist however. If you put in a market order on an ECN, and there is no price equal to or better than the exchange price, you just don't get a fill...not until the prices move to the market, or new bids/offers come in. But you will never be filled at a worse price.
I have often watched the prices of the qqq's on my level 2 instinet terminal while watching the prices on the amex. Occasionally you can arb the difference if you are fast enough. I have to believe however (though I don't know for certain), that the specialist has to be looking at the same thing, so it is a rare occurance to catch them flatfooted. Personally, I can't type or click fast enough to route my orders to take advantage of these situations. But I do work alongside some guys that do it. In better markets, I would say it isn't worth the effort to scalp a penny or two (or three or whatever....). But these days, every little bit helps. Too bad I am a bit older than the Nintendo generation. I think that quick fingered video game talent comes into play on this kind of thing.
When the specialist's spread does widen, making it easier to "middle" on an ECN, it is most likely due to a faster market. So even if you see an opportunity, while it exists for someone, it is unlikely to be you. Remember that the ECN's (the one I get to see stand alone is INCA) really are limited in size. You may see a bid or offer you want inside the specialist's spread, but what good is it if you go market on say 1000 shares and the price you want is only good for 100? Or worse, an odd lot (not on INCA, but certainly possible on say ISLD) You then get filled on the other 900 at the specialist's price anyway (in most cases). By the time that happens, you may not want the trade. And even the fastest can't type in a limit order price fast enough to avoid that. And if they do, again, the trade is probably going the wrong way by that time.
My thought is basically if you have conviction about the trade, don't sweat the penny (pennies). Why miss a trade with an unfilled limit order when a market order would have given you the certain fill?
Bear in mind, this is coming from a guy who trains traders to use limit orders virtually always to open positions. But the reason for that is I don't want the new traders to chase, so I have them ALWAYS open long trades by entering "bid" in the price box, eliminating them from buying into up movement, and "offer" when opening shorts. But that is just to establish good habits for trainees (which we all are for years really). Having said that, after you have disciplined yourself, sometimes you just want the trade beause you really believe in it. Timing then doesn't need to be perfect. That is when you should use market orders anyway (to open....closing trades, well sometimes you just NEED to get out).
And I agree with Don....the specialists don't want to ruin the good thing they have going. Hopefully the day will come (sooner the better) when they make themselves obsolete. Until then, they are just a part of our cost of doing business.